"The Mini was rumored to be Qualcomm-based which would have been Windows RT. And I think they're rethinking Windows RT. So, it's a combination of: Windows RT just confuses the market and they're trying to move Surface to a computing experience as opposed to a tablet experience," O'Donnell added.

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They "decided that the product in development wasn't different enough from rivals and probably wouldn't be a hit," Bloomberg said, citing a person knowledgeable of the decision.

Bloomberg added that engineers had been working on the device and had planned to release it.

O'Donnell said it wasn't a good fit for Microsoft's emphasis on business.

"They focused a lot on business [on Tuesday]. And PCs are what business people are still using," he said.

"[The Surface Pro 3] is the best hardware I've seen for a 2-in-1 [laptop-tablet hybrid]. It's clearly designed to be used the vast majority of time in PC mode," which is what business people need, he added.

Update: A new take on the conspicuous absence of the Mini on Tuesday is that Microsoft postponed rather than killed it. One theory is that Microsoft needs Office Gemini, the touch-friendly version of Office apps before it can launch a smaller tablet.